The latest heat wave The Deloitte South Island Index

A review of the performance of South Island listed companies during the quarter to 31 December 2014

28th Edition Introduction

The Deloitte South Island Index turned around its winter decline and turned up the heat to achieve strong quarterly growth – increasing by $691.2 million Welcome to the 28th Edition of (6.2%) for the quarter ended 31 December 2014. The convincing turnaround in the most recent quarter the Deloitte South Island Index. ensured that the Index regained the losses recorded in the preceding two quarters, ending the 2014 year In this edition we reflect on the at its highest recorded point since the inception of the Index in 2007. performance of South Island Movements in December 2014 The month of December resulted in a slight increase listed companies during the in performance with the Deloitte South Island Index increasing by 1.5%. Over the same period most of the most recent quarter to 31 indices tracked also had minor movements, the NZX 50 Capital Index gained a sound 2.4%, the ASX All December 2014. Ords increased by a small 1.7%, while the Dow Jones decreased marginally (a 0.03% drop). Quarterly movements – Q4 2014 The Deloitte South Island Index achieved growth in every month of the quarter turning around the previous quarterly declines. The Index grew $691.2 million (6.2%) in market capitalisation to 31 December 2014. This result was led by the Energy & Mining and Property sectors, which grew by $421.1 million and $360.8 million in market capitalisation respectively. Annual movements – Dec 2013 to Dec 2014 The Deloitte South Island Index increased by $814.3 million (7.4%) during the year to 31 December 2014 – performing in the middle of the pack with increases in the NZX 50 Capital Index of 12.6% and the Dow Jones gain of 7.5%.The ASX All Ords was the underperformer of the indices tracked, only gaining 0.7% in the twelve month period.

2 Executive Summary

Quarter to 31 December 2014 • The silver medal goes to building $355.0 million in value. Similar to , The final quarter of 2014 saw the Deloitte South Island Ryman Healthcare dominated its sector (Property) Index return to positive territory, achieving 6.2% growth. as it announced it is on track to meet its 15% profit Compared to the declines from the previous two quarters, growth target. this is a pleasing result and reflects the confidence of investors in the market. For the 2014 year, annual growth • The Retail, Biotechnology and Primary sectors each was 7.4% for the Deloitte South Island Index. lost value, with Retail suffering most down $200.4 million (30.2%), driven by Holdings losing One company was removed from the Index during the $201.0 million after disappointing store sales and quarter as Lyttleton Port Company was delisted on 7 gross margin figures from the first five weeks of its November 2014 following a takeover by Christmas sale. City Holdings Limited. As a result, South Port was left as the sole participant in the Port sector • Chatham Rock Phosphate bewildered the market and consequently has been re-categorised into the with a colossal 104.4% gain in market capitalisation. Other sector. Approximately $3.5 million in new capital was raised but there was also a 75.4% share price increase. Arvida Group joined the Deloitte South Island Index The Environmental Protection Authority indicated on 18 December 2014 in the Property sector as a new it expected to deliver a response shortly and companion to Ryman Healthcare and NPT. The company management remains confident resource consents aims to provide a continuum of care, for its retirement will be granted for seabed mining. Further good news village and aged care facility residents. 13 of Arvida includes Lincoln University completing trials confirming Group’s 17 locations are in the South Island, qualifying rock phosphate sourced from the Chatham Rise is the company to join the Deloitte South Island Index. highly effective as a fertilizer. This reaffirms the Property sector as our largest with market capitalisation of over $4.5 billion. • The smallest 10 companies on the Index collectively had a disappointing quarter, suffering a 16.7% loss Key points for the final quarter of 2014 include: in value. This selection includes Bathurst Resources’ • The Deloitte South Island Index grew 6.2% in the $12.4 million (30.4%) slump as it lies dormant waiting quarter, outperforming the NZX 50 Capital Index on for the international coal market to improve. 5.0% growth. The change in direction from 3.0% and From an annual perspective, Meridian Energy was again 1.0% declines for the two preceding quarters of the the winner, leaping up $903.4 million (69.2%) in market Deloitte South Island Index is most welcome. Across capitalisation. Ryman Healthcare had the second largest the ditch, the ASX All Ords again trailed behind with a rise in dollar terms, up $335.0 million, an 8.5% change. minor increase of 1.7% for the quarter. Heartland New Zealand also had an excellent year, • The Energy & Mining, Property, Manufacturing & gaining $194.0 million (58.1%). In percentage terms, Distribution and Other sectors all performed well this Blue Meats performed well with a 50.0% increase in quarter, with Energy & Mining taking the top prize up market capitalisation in 2014 whilst Bathurst Resources $421.1 million (22.4%). The Property sector’s rise was was the worst performer in percentage terms, down also substantial at $360.8 million (8.6%). $144.1 million (83.5%), never recovering from the fall in • The largest gain in dollar terms was Meridian global coal prices. Energy up $414.3 million (23.1%), driving almost all of the movement in the Energy & Mining sector. Undoubtedly, there is still some post-election relief expressed in the figures for this quarter. Meridian is also benefiting from increased demand for electricity in the market, coupled with higher generation prices being achieved.

Deloitte South Island Index – 28th Edition 3 The Quarter to 31 December 2014

Growth in Market Capitalisation NPT 8.8% Meridian Energy again led the Index, rocketing up $414.3 million (23.1%) during the quarter. No doubt some Skyline Enterprises 5.3% residual post-election relief caused part of this movement, Chatham Rock Phosphate 104.4% along with improved energy margins. The Commerce Commission also approved the sale of subsidiary Arc PGG Wrightson 10.8% Metering Services to Vector as Meridian Energy moved to Heartland New Zealand 15.0% focus on its core business. Reassurance was provided by the Mt Mercer wind farm in being completed on EBOS Group 7.2% time and on budget. In November 2014 Meridian Energy was added to the MSCI Global Standard Index which has Ryman Healthcare 9.1% resulted in increased trading from index funds purchasing Meridian Energy 23.1% stock to maintain their portfolio requirements. Ryman Healthcare was the second largest gainer on the $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 Index expanding $355.0 million (9.1%). Continuing its $million recent volatility, Ryman Healthcare hit a low of $7.22 per share in October before recovering to $8.52 per share by the end of the quarter. Some pleasing financial results were released, with record underlying profit up 13% for the half year indicating Ryman Healthcare is on track to (31.6)% Kathmandu Holdings meet its 15% profit growth target for the year. (5.9)% Synlait Milk It was a busy quarter for EBOS Group, with the company Chatham Rock Phosphate (9.0)% acquiring BlackHawk Pet Care for A$52 million on the Holdings last day of October and its subsidiary Symbion opening topped the table in terms(8.6)% ofPacific Edge a new high tech distribution facility in . EBOS Group experienced a $99.2 million (7.2%) gain in market percentage growth for (7.8)%the Scales Corporation capitalisation during the quarter. (30.4)% Bathurst Resources Another winner was Heartland New Zealand, with the quarter, up a whopping (12.2)% company gaining $69.0 million (15.0%) for the December Foley Family Wines 2014 quarter. Fitch Ratings upgraded ’s 104.4%. This is in part due(61.6)% toEnergy Mad credit rating to BBB outlook stable citing reductions in non-core assets and a niche market strategy providing a raising($250) an ($200) additional ($150) ($100) $3.5 ($50) $0 leading market share. $million Chatham Rock Phosphate topped the table in terms million to support losses as of percentage growth for the quarter, up a whopping 104.4%. This is in part due to raising an additional $3.5 Chatham Rock Phosphate million to support losses as Chatham Rock Phosphate Movement in Sector Indices - Quarter to December 2014 awaits marine consents to begin mining the Chatham Rise awaits marine consents to seabed. A decision from the Environmental Protection 30% Agency is expected shortly and management remains confident the consents will be granted. begin mining the Chatham 20% Rise seabed.

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Sector NPT 8.8%

Skyline Enterprises 5.3%

Chatham Rock Phosphate 104.4%

PGG Wrightson 10.8%

Heartland New Zealand 15.0%

EBOS Group 7.2%

Ryman Healthcare 9.1%

Meridian Energy 23.1%

$0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $million

Declines in Market Capitalisation (31.6)% Kathmandu Holdings Kathmandu Holdings tumbled $201.0 million (31.6%), in part because of disappointing gross margins from the first (5.9)% Synlait Milk part of their annual Christmas promotion. Results for the (9.0)% Skellerup Holdings current year are expected to be worse than the previous year, according to management. This announcement (8.6)% Pacific Edge was perhaps amplified by the current expansion plan, (7.8)% Scales Corporation having opened 8 new stores since August 2014 with plans to open a further 15 by the end of the 2015. Acting (30.4)% Bathurst Resources CEO of Kathmandu Holdings, Mark Todd, said during the quarter that “in Australia, our trading performance (12.2)% Foley Family Wines throughout the Christmas period to date has been below (61.6)% Energy Mad expectations, which is a reflection of negative consumer confidence and a difficult discretionary retail trading ($250) ($200) ($150) ($100) ($50) $0 environment”. $million Synlait Milk experienced a $29.3 million (5.9%) dip, despite delivering on net profit after tax forecasts of $19.6 million. During the quarter Chinese regulators registered the company as a manufacturer of retail-ready Movement in Sector Indices - Quarter to December 2014 infant formula, opening up further export opportunities in the region. Synlait Milk considers itself insulated30% against the recent dry weather, as its suppliers had adequate Kathmandu Holdings tumbled irrigation systems in place. 20% The third largest decline in the quarter came from $201.0 million (31.6%), in part Skellerup Holdings, down $27.0 million (9.0%). Although annual results released in the quarter were10% because of disappointing gross an improvement on last year, management reports the company still fell short on growth expectations margins from the first part of from the industrial unit. Skellerup Holdings also had0% consents approved and began construction on their new manufacturing facility in the suburb of Wigram, their annual Christmas (10%) Christchurch during the quarter. promotion. Results for the Meanwhile, Pacific Edge received patent grants in Europe for their colorectal cancer prognostic technology% Movement in Index (20%) during the quarter, opening the door to 38 European countries. current year are expected to be Pacific Edge’s Cxbladder technology was also released (30%) in New Zealand in December with plans to launch it in worse than the previous year, the United States early 2015. It successfully matched expectations for its preliminary results announcements;(40%) according to management. Bio- Energy Manufacturing Primary Property Retail Other even after all its activity, Pacific Edge still decreased $25.5technology & Mining & Distribution million (8.6%) in terms of market capitalisation. Sector

Deloitte South Island Index – 28th Edition 5 NPT 8.8% SectorSkyline Enterprises Movements 5.3% Chatham Rock Phosphate 104.4%

PGG Wrightson 10.8%

Heartland New Zealand 15.0%

EBOS Group 7.2%

Ryman Healthcare 9.1%

Meridian Energy 23.1%

Quarter to 30 September 2014 $0 $50 $100 $150large $200 scale $250coal mining. $300 NZ $350 Windfarms $400 $450 and Windflow Technology$million decreased 12.7% and 20.0% respectively The Deloitte South Island Index is back on the upward as the warranty dispute between them heads for slope following two consecutive quarters of contraction. arbitration. Aorere Resources held its ground, despite Only four of the seven sectors rose with the Energy & benefiting from Chatham Rock Phosphate’s gain, in Mining sector the clear winner, driven by heavyweight which it has an 8.9% shareholding. Meridian Energy. Conversely, the Retail sector lost $200.4 (31.6)% million in value as a result of the poor performance The Other sector experienced Kathmanduan overall gain,Holdings driven by of Kathmandu Holdings. The Port sector has been Heartland increasing(5.9)% $69.0 millionSynlait (15.0%). Milk SLI Systems disestablished following Lyttleton Port Company’s jumped $6.2 million (9.3%) after announcing the launch delisting and its removal from the Deloitte South Island of a new initiative(9.0)% with Hybris,Skellerup part of theHoldings SAP group, Index. South Port New Zealand has been re-categorised which should extend SLI System’s reach. South Port New (8.6)% Pacific Edge into the Other sector. Zealand posted a net profit after tax of $6.7 million, a 2.8% improvement(7.8)% on the 2013 result along with a The Energy & Mining sector had a boom in the Scales Corporation record 2.72 million tonnes of cargo volume shifted in the December quarter led by Meridian Energy growing (30.4)% period. Despite these results, SouthBathurst Port Resources New Zealand $414.3 million (23.1%), likely due to some post-election dipped $1.3 million (1.2%). Connexionz lost $0.5 million relief and improved generation prices. Chatham Rock (12.2)% Foley Family Wines (13.2%) in value, although this only amounts to a Phosphate also pitched in with $21.5 million (104.4%) $0.01 change in the(61.6)% share price.Energy Moa Mad Group reported a of growth which more than offset Bathurst Resources’s similar loss to last year of $3.2 million, impacting on the decline of $12.4 million (30.4%)($250) as it lies ($200) dormant ($150) ($100) ($50) $0 $0.3 million (1.5%) decrease for the quarter. The final waiting for the international market to improve to begin$million

Movement in Sector Indices - Quarter to December 2014

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Sector

6 The Energy & Mining sector had a boom in the December quarter led by Meridian Energy growing $414.3 million (23.1%), likely due to some post-election relief and improved generation prices.

Deloitte South Island Index – 28th Edition 7 company in the sector, Skyline Enterprises, rose $20.5 decline include a larger loss than last year caused by million (5.3%) in the quarter as management announced one-off restructuring costs, exiting the European market the company is on track to meet performance targets for and a reduction in US revenue. Scott Technology had the year. a big spike mid-November then settled down prior to announcing the acquisition of Australian firm Machinery Property also experienced a healthy gain of 8.6% on Automation & Robotics Pty Ltd for $13 million, ending the back of Ryman Healthcare’s hefty $355.0 million the quarter down 3.3%. (9.1%) gain. The new kid on the block, Arvida Group, was listed and joined the Deloitte South Island Index on The Retail sector plummeted $200.4 million (30.2%) 18 December. Arvida is a direct competitor to Ryman which is disappointing given the time of year, however Healthcare which will make for interesting comparisons it continues the poor performance of the sector from as the companies compete on the Index. By the end of the previous two quarters – dropping 16.4% and 1.0% December, Arvida Group’s share price had dropped 1.1% in the June and September 2014 quarters respectively. from its listing price to $0.94 per share. NPT has turned a Kathmandu Holdings suffered the greatest loss of all the loss into a profit comparing the six months to September companies on the Index, dropping 201.0 million (31.6%) against the previous period as long term anchor tenants during the quarter driving the sectors performance The Warehouse and Warehouse Stationery have been down. The other company in the sector, Smith City secured for the Eastgate Shopping Centre in Linwood, Group, did manage to buck the trend by making a small Christchurch. This has influenced the $8.1 million (8.8%) gain of $0.6 million (2.2%) during the quarter. rise in market capitalisation for NPT, along with the recent All three firms in the Biotechnology sector took a tumble purchase of the Roskill Centre in Mt Roskill, Auckland. this quarter, led by Pacific Edge down $25.5 million The Manufacturing & Distribution sector made a (8.6%). Pacific Edge received patent grants in Europe modest gain of 3.6%, ushered by EBOS Group’s gain and released its Cxbladder technology in New Zealand of $99 million (7.2%) in market capitalisation after in December with plans to launch it in the United States acquiring BlackHawk Pet Care. This was partially offset early 2015. BLIS Technologies fell $4.4 million (17.4%) by Skellerup Holdings decline of 9.0%. Energy Mad after their Sinopharm test launch extended from 30 plunged a massive 61.6% during the quarter, although to 600 pharmacies in China, however they received a this only had a minor effect on the sector due to the fine for breaching NZX listing rules by not disclosing relatively small size of the company. The reasons for the this material information in a timely manner. The final

8 The Retail sector plummeted $200.4 million (30.2%) which is disappointing given the time of year, however it continues the poor performance of the sector from the previous two quarters – dropping 16.4% and 1.0% in the June and September 2014 quarters respectively. constituent in the sector, Pharmazen, dropped $1.6 its subsidiary Polarcold securing as a customer million (16.7%) in terms of market capitalisation during for its new project in Auckland, where construction the quarter. recently began. SeaDragon provided updated forecasts predicting a 17% increase in revenue along with news There were four upwards movements for the Primary that building consents have been granted for their new sector led by PGG Wrightson’s $33.9 million (10.8%) Refined Fish Oil plant with the company gaining 4.8% growth. Blue Sky Meats announced the acquisition of in the 3 months to December 2014. Foley Family Wines Clover Export Ltd, a beef and venison operation with lost $10.5 million (12.2%) in market capitalisation as it export licences based in Gore which was received expects a significant drop in the bulk wine price during well, boosting its market capitalisation by $3.4 million 2015 due to excess supply in the market. (19.7%). Silver Fern Farms rose $2.0 million (5.0%), returning to a profit for the 2014 year. Red meat An interesting company to keep an eye on is Martin producers had a strong quarter, with the other Primary Aircraft Company, a Christchurch based company hoping sector companies causing the net 1.3% decline in market to list on the ASX in February 2015. Martin Aircraft capitalisation for the sector. The three Primary sector Company is attempting to become the first commercial declines for the quarter included Synlait Milk dropping manufacturer of jetpacks aimed at emergency services. $29.3 million (5.9%). Synlait Milk endured considerable Although Martin Aircraft Company won’t meet the volatility in the quarter after receiving approval from criteria for the Deloitte South Island Index unless it lists in China for their infant milk formula. Scales Corporation New Zealand, it is great to see some local talent making also had a negative shift of $16.8 million (7.8%), despite a splash across the ditch.

The table below sets out market capitalisation by sector as at 31 December 2014 and provides a comparison against the position as at 30 September 2014.

% change in Number of 31 Dec 2014 30 Sep 2014 Mvmt in Quarter $ Mkt Cap during % of Industry Companies $ million $ million million quarter Index

Biotechnology 3 $299.7 $331.2 $(31.5) (9.5)% 2.5%

Energy & Mining 6 $2,299.5 $1,878.4 $421.1 22.4% 19.5%

Manufacturing & Distribution 4 $1,821.1 $1,758.1 $63.0 3.6% 15.4%

Other 6 $1,135.6 $1,042.0 $93.6 9.0% 9.6%

Primary 7 $1,195.3 $1,210.7 $(15.4) (1.3)% 10.1%

Property 3 $4,573.1 $4,212.3 $360.8 8.6% 38.8%

Retail 2 $463.7 $664.1 $(200.4) (30.2)% 3.9%

TOTAL 31 $11,788.0 $11,096.8 $691.2 6.2% 100.0%

Deloitte South Island Index – 28th Edition 9 Benchmarking

Quarterly Comparison of the Deloitte South Performance of Deloitte South Island Index vs NZX 50 Island Index and the NZX 50 2.30 The Deloitte South Island Index made a turnaround from the September quarter’s 1.0% decline, now up 6.2% 2.00 for the December 2014 quarter. The return to positive growth is welcome following the previous six months of 1.70 contraction for the Index. The Energy & Mining sector was the main driver for this quarter’s performance, 1.40 gaining $421.1 million in value. The Deloitte South Island Index tracked above the NZX 50 Capital Index 1.10 which was up 5.0% for the December quarter.

It is important to mention that we are now comparing 0.80 against the NZX 50 Capital Index, whereas previously we used the NZX 50 Gross Index. The Gross Index includes Total Market Capitalisation (relative to one) 0.50 dividends on the assumption that they are reinvested 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec while the Capital Index does not make this assumption, 2012 2013 2013 2013 2013 2014 2014 2014 2014 making it a more meaningful comparison to the Deloitte NZX 50 Capital Index Deloitte SI Index South Island Index. Base period - December 2006

Performance of Deloitte South Island Index vs Major Indices

2.30

2.00 Comparison of Deloitte South Island Index and

Other Indices 1.70 There were modest improvements to all the indices in the fourth quarter of 2014. The Deloitte South Island 1.40 Index came out on top up 6.2%, beating the NZX 50 Capital Index up 5.0% and the Dow Jones with 4.6% 1.10 growth. The ASX All Ords lagged behind with 1.7% growth, which is still a pleasing result for the Australians 0.80 given the ASX All Ords was down 1.6% for the September 2014 quarter. Total Market Capitalisation (relative to one) 0.50 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec 2012 2013 2013 2013 2013 2014 2014 2014 2014

NZX 50 Deloitte Dow Jones ASX All Ords Capital Index SI Index

Base period - December 2006

10 Deloitte South Island Index December 2014

Of the 31 companies currently listed on the Deloitte South Island Index, 13 (42%) experienced a rise in market capitalisation during the quarter to 31 December 2014, 17 declined and 1 remained unchanged.

The full Deloitte South Island Index for the 31 December 2014 quarter, ranked by market capitalisation, is set out in the table below:

Dec Sep Change in Change in Share Price 2014 2014 Mcap Dec Mcap Sep Mcap ($m) Mcap (%) in 31 Dec Rank Rank Ticker Company Sector 2014 ($m) 2014 ($m) in Quarter Quarter 2014

1 1 RYM Ryman Healthcare Property $4,260.0 $3,905.0 $355.0 9.1% $8.520

2 2 MELCA Meridian Energy Energy & Mining $2,209.5 $1,795.2 $414.3 23.1% $1.760

3 3 EBO EBOS Group Manufacturing & Distribution $1,474.9 $1,375.7 $99.2 7.2% $9.850

4 6 HNZ Heartland New Zealand Other $527.6 $458.6 $69.0 15.0% $1.130

5 5 SML Synlait Milk Primary $468.3 $497.6 $(29.3) (5.9)% $3.200

6 4 KMD Kathmandu Holdings Retail $435.2 $636.2 $(201.0) (31.6)% $2.160

7 7 SKYLINE Skyline Enterprises Other $408.6 $388.1 $20.5 5.3% $12.000

8 8 PGW PGG Wrightson Primary $347.2 $313.3 $33.9 10.8% $0.460

9 9 SKL Skellerup Holdings Manufacturing & Distribution $273.8 $300.8 $(27.0) (9.0)% $1.420

10 10 PEB Pacific Edge Biotechnology $270.8 $296.3 $(25.5) (8.6)% $0.850

11 12 ARV Arvida Group Property $212.7 $215.0 $(2.3) (1.1)% $0.940

12 11 SCL Scales Corporation Primary $199.9 $216.7 $(16.8) (7.8)% $1.430

13 13 SPN South Port New Zealand Port $103.6 $104.9 $(1.3) (1.2)% $3.950

14 14 NPT NPT Property $100.4 $92.3 $8.1 8.8% $0.620

15 15 FFW Foley Family Wines Primary $75.7 $86.2 $(10.5) (12.2)% $1.450

16 17 SLI SLI Systems Other $73.2 $67.0 $6.2 9.3% $1.200

17 16 SCT Scott Technology Manufacturing & Distribution $68.1 $70.4 $(2.3) (3.3)% $1.530

18 19 SFF Silver Fern Farms Primary $42.2 $40.2 $2.0 5.0% $0.420

19 23 CRP Chatham Rock Phosphate Energy & Mining $42.1 $20.6 $21.5 104.4% $0.200

20 20 SEA SeaDragon Primary $41.3 $39.4 $1.9 4.8% $0.022

21 21 SCY Smiths City Group Retail $28.5 $27.9 $0.6 2.2% $0.540

22 18 BRL Bathurst Resources Energy & Mining $28.4 $40.8 $(12.4) (30.4)% $0.030

23 22 BLT BLIS Technologies Biotechnology $20.9 $25.3 $(4.4) (17.4)% $0.019

24 25 BLUESKY Blue Sky Meats Primary $20.7 $17.3 $3.4 19.7% $1.800

25 24 MOA Moa Group Other $19.3 $19.6 $(0.3) (1.5)% $0.405

26 26 NWF NZ Windfarms Energy & Mining $13.8 $15.8 $(2.0) (12.7)% $0.048

27 28 PAZ Pharmazen Biotechnology $8.0 $9.6 $(1.6) (16.7)% $0.050

28 29 AOR Aorere Resources Energy & Mining $4.5 $4.5 $0.0 0.0% $0.007

29 27 MAD Energy Mad Manufacturing & Distribution $4.3 $11.2 $(6.9) (61.6)% $0.100

30 30 CNX Connexionz Other $3.3 $3.8 $(0.5) (13.2)% $0.060

31 31 WTL Windflow Technology Energy & Mining $1.2 $1.5 $(0.3) (20.0)% $0.060

31 31 TOTAL $11,788.0 $11,096.8 $691.2 6.2%

Deloitte South Island Index – 28th Edition 11 Compilation of the Deloitte South Island Index The Deloitte South Island Index (‘the Index’) is compiled from information provided by the NZX, and Unlisted on the market capitalisation of each South-Island based listed company. Broadly, a company is included in the Index where its registered office is in the South Island and/or a substantial portion of its operations are focused in the South Island. The information on South Island listed companies is extracted and totalled to provide a cumulative market capitalisation for all South Island listed companies. The base period of the Deloitte South Island Index is 31 December 2006 and for the purposes of the Index this data is given a notional value of one. All subsequent quarterly cumulative market capitalisation totals are divided by the totals for the December 2006 quarter to obtain a relative movement. Market capitalisation will move as a result of capital injections, payments of dividends and capital returns. If a new South Island based company lists on the NZX or Unlisted they will be reflected in the Index as though they were present in the base period. Accordingly, the Index will only reflect changes in market capitalisation subsequent to listing. If a company is suspended or delisted during a quarter, no data will be included for the company, including any historical data, until the company is re-listed or the suspension lifted. The metrics for Meridian Energy Limited have been calculated on the basis of the issued instalment receipts, rather than the company’s issued ordinary shares. For the purposes of the sector analysis some sector segments have been grouped to provide a more meaningful analysis.

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